The Executive Board of the International Monetary Fund (IMF) completed
today the first review of Togo’s performance under the program supported by
the
Extended Credit Facility
(ECF) on a lapse-of-time basis.
[1]
The completion enables the release of SDR25.17 million (about US$35.61
million), bringing total disbursements under the arrangement to SDR50.34
million (about US$71.22 million). The ECF arrangement for SDR176.16 million
(120 percent of Togo’s quota in the IMF) to support the country’s economic
and financial reforms was approved on May 5, 2017 (see
Press Release No. 17/151).
Program implementation under the ECF-supported program has been good. All
quantitative performance criteria and prior actions were met as well as
four out of five structural benchmarks.
The fiscal consolidation envisaged under the ECF-supported program has
begun. The primary deficit improved from an annual average of about 6
percent of GDP in 2013-16 to a surplus of 1.4 percent of GDP in the first
half of 2017, due primarily to expenditure rationalization and the halting
of non-orthodox financing of public investment. Public debt is projected to
decline from the peak of 81.5 percent of GDP at end-2016 to 77.3 percent of
GDP by end-2017. Economic activity is estimated to have expanded by 4.8
percent in 2017, with low inflation. The current account deficit remains
large but is expected to narrow gradually.
The medium-term growth projections were revised slightly downward and the
balance of risks is tilted to the downside. The recent infrastructure
upgrading and external concessional financing are expected to support
productivity, stimulate private investments, and thus compensate for the
negative fiscal impulse resulting from the fiscal consolidation. However,
country-specific and regional/global factors may cloud program
implementation. In particular, if the tensions in recent months persist,
the private investment boost that is expected to compensate for the public
investment retrenchment may not fully materialize.
Fiscal consolidation is set to continue in 2018, while accommodating
tighter domestic and external constraints. Sustained fiscal efforts will
help reduce debt further and create room for additional social spending,
which is critical for poverty reduction. Strengthening fiscal institutions
and debt management is essential. The efficiency of public spending will be
improved by requiring that public investment projects follow established
procurement and budgetary processes. The authorities are enhancing controls
to broaden the taxpayer base and improve revenue collection. Improved cash
management and prudent borrowing policies will result in lower government
borrowing costs, further helping the fiscal adjustment. Moreover, given the
harmful impact of government payment arrears on economic activity, the
authorities plan to step up efforts to verify the arrears stock, proceed
with its clearance, and strengthen the system of public financial
management to prevent new arrears accumulation.
The restructuring of weak banks should be accelerated to help restore
financial stability and prevent the reemergence of risks to the state
budget. The restructuring should be guided by sound principles, which will
provide a solid basis for the operations of the newly-merged bank. The
timely finalization and adoption of a comprehensive restructuring plan,
including measures to restore financial viability and a business plan of
the new bank, are priorities.
Broader structural reforms are essential to boost productivity,
competitiveness, and inclusive growth. As public investment returns to a
sustainable level, the private sector is expected to play an increasing
role as the engine of growth. It is essential to improve the business
climate, including by opening-up some key sectors.
|
Table 1. Togo: Selected Economic and Financial Indicators,
2014–22
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2014
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2015
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2016
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2017
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2018
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2019
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2020
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2021
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2022
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Est.
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Proj.
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(Percentage change, unless otherwise indicated)
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National income, prices, and exchange rates
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|
|
|
|
|
|
|
|
|
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Real GDP
|
5.9
|
5.3
|
5.0
|
|
4.8
|
5.0
|
5.2
|
5.3
|
5.4
|
5.6
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|
Real GDP per capita
|
3.1
|
2.5
|
2.2
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|
2.0
|
2.2
|
2.4
|
2.5
|
2.6
|
2.8
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GDP deflator
|
-0.1
|
2.7
|
2.5
|
|
0.9
|
1.5
|
1.6
|
2.0
|
2.7
|
3.0
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Consumer price index (average)
|
0.2
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1.8
|
0.9
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|
-0.1
|
1.2
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1.4
|
2.0
|
2.0
|
2.0
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GDP (CFAF billions)
|
2,259
|
2,443
|
2,628
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|
2,779
|
2,962
|
3,166
|
3,400
|
3,680
|
4,012
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Exchange rate CFAF/US$ (annual average level)
|
493.6
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591.2
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592.7
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|
…
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…
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…
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…
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…
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…
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Real effective exchange rate (appreciation = –)
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-1.2
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7.1
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-1.0
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|
…
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…
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…
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…
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…
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…
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Terms of trade (deterioration = –)
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3.2
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-11.5
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-0.2
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|
-2.3
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-0.8
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0.9
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1.4
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0.8
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2.5
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(Percentage change of beginning-of-period broad money)
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Monetary survey
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|
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Net foreign assets
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-7.0
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-3.6
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5.1
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|
0.1
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0.1
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0.1
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0.1
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0.1
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0.1
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Net credit to government
|
1.3
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-2.1
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-2.3
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|
-4.0
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-2.3
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-0.6
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-2.3
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-1.6
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-2.9
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Credit to nongovernment sector
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1.2
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13.2
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10.1
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11.2
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10.6
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8.9
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11.1
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11.0
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13.1
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Broad money (M2)
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3.7
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20.6
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12.6
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5.7
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6.6
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6.9
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7.4
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8.2
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9.0
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Velocity (GDP/end-of-period M2)
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2.1
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1.9
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1.8
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1.8
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1.8
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1.8
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1.8
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1.8
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1.8
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(Percent of GDP, unless otherwise indicated)
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Investment and savings
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|
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Gross domestic investment
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32.7
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33.8
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33.8
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31.8
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32.1
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29.1
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31.0
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31.9
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31.8
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Government
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11.3
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13.1
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14.0
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|
11.0
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10.6
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7.1
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8.5
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8.5
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8.4
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Nongovernment
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21.4
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20.7
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19.9
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|
20.7
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21.5
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22.1
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22.5
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23.4
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23.4
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Gross national savings
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22.7
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22.7
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24.1
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|
23.5
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23.9
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21.9
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24.6
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26.5
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26.8
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Government
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4.5
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4.2
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4.4
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|
8.7
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8.2
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7.3
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7.7
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7.2
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7.3
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Nongovernment
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18.2
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18.5
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19.8
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14.8
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15.8
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14.5
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16.9
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19.3
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19.5
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|
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|
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Government budget
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|
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|
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Total revenue and grants
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20.7
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22.1
|
21.7
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|
25.3
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25.6
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25.4
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25.5
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25.4
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25.4
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Revenue
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18.3
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19.7
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18.9
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|
20.0
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21.7
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21.3
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21.4
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21.3
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21.3
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Total expenditure and net lending
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27.5
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31.1
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31.4
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|
27.6
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28.0
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25.1
|
26.2
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26.7
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26.5
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Domestic primary expenditure
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21.5
|
23.0
|
23.4
|
|
17.8
|
18.2
|
16.0
|
17.5
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17.6
|
17.5
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Domestic primary balance1
|
-3.1
|
-3.2
|
-4.5
|
|
2.3
|
3.5
|
5.3
|
3.9
|
3.7
|
3.8
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Overall primary balance (cash basis)
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-6.5
|
-5.4
|
-7.2
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|
-2.7
|
-2.2
|
2.0
|
2.0
|
2.0
|
2.0
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Overall balance (cash basis)
|
-8.0
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-7.8
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-9.6
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|
-4.8
|
-4.6
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-1.1
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-0.8
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-1.3
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-1.0
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|
|
|
|
|
|
|
|
|
|
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External sector
|
|
|
|
|
|
|
|
|
|
|
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Current account balance
|
-10.0
|
-11.2
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-9.7
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|
-8.2
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-8.2
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-7.3
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-6.4
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-5.4
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-5.0
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Exports (goods and services)
|
39.7
|
36.3
|
34.9
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|
33.9
|
32.9
|
33.7
|
34.1
|
35.0
|
34.5
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Imports (goods and services)
|
-57.7
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-58.5
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-54.9
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|
-52.3
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-50.9
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-50.8
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-50.3
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-50.2
|
-49.2
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External public debt2
|
17.3
|
21.2
|
20.4
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|
21.0
|
23.4
|
26.1
|
26.6
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26.8
|
26.6
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External public debt service (percent of exports) 2
|
2.9
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3.1
|
5.2
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|
4.2
|
3.7
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3.9
|
4.7
|
4.9
|
5.3
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|
Domestic public debt3,4
|
47.8
|
54.3
|
61.2
|
|
56.3
|
51.0
|
44.1
|
40.1
|
36.3
|
32.3
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Total public debt4,5
|
65.1
|
75.6
|
81.5
|
|
77.3
|
74.4
|
70.2
|
66.7
|
63.0
|
58.9
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Sources: Togolese authorities and IMF staff estimates and
projections.
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1 Revenue minus expenditure, excluding grants, interest,
and foreign-financed expenditure.
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2 Includes state-owned enterprise external debt.
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3 Includes prefinancing debt, domestic arrears and
state-owned enterprise domestic debt.
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4 Does not include bank recapitalization costs, estimated
at 2-4 percent of GDP. Realization of these costs will
worsen the debt profile.
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5 Includes prefinancing debt, domestic arrears and
state-owned enterprise debt.
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[1]
The Executive Board takes decisions under its lapse-of-time
procedure when a proposal can be considered without convening
formal discussions.
